LONDON (Reuters) - Britain’s biggest builder Barratt said on Wednesday it expected 2016/17 pretax profit to reach the top end of market expectations despite building barely any more homes than in the previous financial year.
The firm said it anticipated profit would reach up to 733 million pounds in the 12 months to the end of June, the highest figure in analysts’ expectations according to a Thomson Reuters poll. It would represent a 7 percent increase on 2015/16.
But the builder said it would complete only around 30 more homes to reach a total of 17,350 units, despite concerted government efforts to boost housebuilding and deal with a chronic shortage which has pushed up rents and house prices.
Shares in the company rose 3 percent by 0715 GMT.
Rising house prices, cheap mortgages and government schemes designed to help younger people get on to the housing market have helped Barratt and most of its peers book bumper profits over the last few years.
Whilst the company foresees small volume increases over the next few years, it said it would build fewer properties in London next year after an around 20 percent decrease this year, as rising city centre land prices have pushed it increasingly into the suburbs.
“If you look at completion volumes, we will some further reduction in London completions as we go into the year to June 2018,” Chief Executive David Thomas told Reuters.
“We’ve been very successful in terms of securing sites in zones three to six so we’ve got sites coming through,” he said, referring to the areas further out from the city centre.
Parts of central London have also become less attractive to developers as sales prices fall and demand slumps due to an increased stamp duty property tax on top-end properties and Brexit deterring some foreign investors.
Reporting by Costas Pitas; editing by Kate Holton/Keith Weir